Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING and Oppenheimer International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining COSCO SHIPPING and Oppenheimer International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSCO SHIPPING Holdings and Oppenheimer International Diversified, you can compare the effects of market volatilities on COSCO SHIPPING and Oppenheimer International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in COSCO SHIPPING with a short position of Oppenheimer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and Oppenheimer International.
Diversification Opportunities for COSCO SHIPPING and Oppenheimer International
The 3 months correlation between COSCO and Oppenheimer is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Oppenheimer International Dive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer International and COSCO SHIPPING is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on COSCO SHIPPING Holdings are associated (or correlated) with Oppenheimer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer International has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Oppenheimer International go up and down completely randomly.
Pair Corralation between COSCO SHIPPING and Oppenheimer International
Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to generate 5.09 times more return on investment than Oppenheimer International. However, COSCO SHIPPING is 5.09 times more volatile than Oppenheimer International Diversified. It trades about 0.5 of its potential returns per unit of risk. Oppenheimer International Diversified is currently generating about 0.0 per unit of risk. If you would invest 654.00 in COSCO SHIPPING Holdings on March 6, 2024 and sell it today you would earn a total of 242.00 from holding COSCO SHIPPING Holdings or generate 37.0% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, COSCO SHIPPING showed solid returns over the last few months and may actually be approaching a breakup point.
Over the last 90 days Oppenheimer International Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.